what factors influence the willingness of union members to participate in local union activities?

Chapter 15. Issues in Labor Markets: Unions, Discrimination, Immigration

15.i Unions

Learning Objectives

By the stop of this section, y'all volition be able to:

• Explain the concept of labor unions, including membership levels and wages
• Evaluate arguments for and against labor unions
• Analyze reasons for the decline in U.S. marriage membership

A labor union is an organization of workers that negotiates with employers over wages and working conditions. A labor union seeks to change the residuum of power betwixt employers and workers past requiring employers to deal with workers collectively, rather than as individuals. Thus, negotiations betwixt unions and firms are sometimes chosen collective bargaining.

The subject of labor unions can be controversial. Supporters of labor unions view them as the workers' chief line of defence against efforts past turn a profit-seeking firms to hold down wages and benefits. Critics of labor unions view them every bit having a tendency to grab as much as they can in the brusque term, fifty-fifty if it ways injuring workers in the long run by driving firms into bankruptcy or by blocking the new technologies and production methods that pb to economical growth. We will start with some facts nearly spousal relationship membership in the U.s..

Facts about Union Membership and Pay

According to the U.Southward. Agency of Labor and Statistics, near xi.1% of all U.S. workers vest to unions. Post-obit are some of the facts provided past the bureau for 2014:

• 12.0% of U.S. male person workers belong to unions; 10.5% of female person workers do
• 11.1% of white workers, thirteen.four % of black workers, and 9.viii % of Hispanic workers vest to unions
• 12.five% of full-time workers and 6.0% of function-fourth dimension workers are union members
• 4.2% of workers ages 16–24 vest to unions, as practise 14% of workers ages 45-54
• Occupations in which relatively loftier percentages of workers vest to unions are the federal government (26.nine% vest to a union), state regime (31.iii%), local regime (41.seven%); transportation and utilities (20.6%); natural resources, construction, and maintenance (xvi.3%); and production, transportation, and fabric moving (fourteen.7%)
• Occupations that have relatively low percentages of unionized workers are agricultural workers (ane.iv%), financial services (1.one%), professional and business services (2.4%), leisure and hospitality (2.7%), and wholesale and retail merchandise (four.7%)

In summary, the percent of workers belonging to a union is higher for men than women; higher for blacks than for whites or Hispanics; college for the 45–64 age range; and higher among workers in regime and manufacturing than workers in agronomics or service-oriented jobs. Tabular array two lists the largest U.Due south. labor unions and their membership.

Marriage	Membership
National Education Association (NEA)	iii.2 million
Service Employees International Union (SEIU)	2.1 million
American Federation of Teachers (AFT)	i.5 million
International Alliance of Teamsters (IBT)	1.iv meg
The American Federation of State, County, and Municipal Workers (AFSCME)	1.three 1000000
United Food and Commercial Workers International Union	1.3 million
United Steelworkers	1.2 million
International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW)	990,000
International Association of Machinists and Aerospace Workers	720,000
International Alliance of Electrical Workers (IBEW)	675,000
Table ii. The Largest American Unions in 2013. (Source: U.South. Department of Labor, Bureau of Labor Statistics)

In terms of pay, benefits, and hiring, U.S. unions offer a skilful news/bad news story. The good news for unions and their members is that their members earn about 20% more than nonunion workers, even after adjusting for factors such as years of work feel and education level. The bad news for unions is that the share of U.S. workers who belong to a labor union has been steadily declining for 50 years, as shown in Figure 1. Nigh i-quarter of all U.S. workers belonged to a spousal relationship in the mid-1950s, only only 11.1% of U.S. workers are union members today. If y'all leave out workers employed past the government (which includes teachers in public schools), only vi.half dozen% of the workers employed by private firms now work for a union.

Figure 1. Percentage of Wage and Salary Workers Who Are Union Members. The share of wage and salary workers who belong to unions rose sharply in the 1930s and 1940s, just has tailed off since then to 11.1% of all workers in 2014.

The following section analyzes the higher pay union workers receive compared the pay rates for nonunion workers. The following section analyzes declining union membership levels. An overview of these two issues will allow us to hash out many aspects of how unions piece of work.

Higher Wages for Union Workers

Why might union workers receive higher pay? What are the limits on how much higher pay they can receive? To analyze these questions, allow'south consider a situation where all firms in an manufacture must negotiate with a single union, and no firm is immune to hire nonunion labor. If no labor union existed in this market place, then equilibrium (East) in the labor market would occur at the intersection of the demand for labor (D) and the supply of labor (South) in Effigy ii. The marriage can, nevertheless, threaten that, unless firms agree to the wages they demand, the workers will strike. Equally a event, the labor union manages to achieve, through negotiations with the firms, a spousal relationship wage of Wu for its members, above what the equilibrium wage would otherwise accept been.

Figure ii. Union Wage Negotiations. Without a wedlock, the equilibrium at Eastward would accept involved the wage Nosotros and the quantity of labor Qe. However, the matrimony is able to utilize its bargaining ability to heighten the wage to Wu. The outcome is an backlog supply of labor for spousal relationship jobs. That is, a quantity of labor supplied, Qs is greater than firms' quantity demanded for labor, Qd.

This labor market state of affairs resembles what a monopoly firm does in selling a product, but in this example a union is a monopoly selling labor to firms. At the higher union wage Wu, the firms in this manufacture will rent less labor than they would have hired in equilibrium. Moreover, an excess supply of workers want matrimony jobs, simply firms will not be hiring for such jobs.

From the wedlock point of view, workers who receive higher wages are better off. However, notice that the quantity of workers (Qd) hired at the union wage Wu is smaller than the quantity Qe that would have been hired at the original equilibrium wage. A sensible marriage must recognize that when information technology pushes up the wage, it as well reduces the incentive of firms to hire. This situation does not necessarily mean that union workers are fired. Instead, it may exist that when union workers move on to other jobs or retire, they are not always replaced. Or perchance when a firm expands product, information technology expands employment somewhat less with a college union wage than information technology would have done with the lower equilibrium wage. Or perhaps a business firm decides to buy inputs from nonunion producers, rather than producing them with its own highly paid unionized workers. Or perhaps the firm moves or opens a new facility in a country or land where unions are less powerful.

From the house's point of view, the key question is whether the higher wage of union workers is matched past higher productivity. If so, then the firm can beget to pay the college matrimony wages and, indeed, the demand curve for "unionized" labor could actually shift to the right. This could reduce the job losses as the equilibrium employment level shifts to the right and the difference between the equilibrium and the marriage wages volition have been reduced. If worker unionization does non increase productivity, so the higher wedlock wage will cause lower profits or losses for the house.

Matrimony workers might have higher productivity than nonunion workers for a number of reasons. Beginning, higher wages may elicit higher productivity. Second, union workers tend to stay longer at a given job, a tendency that reduces the employer'south costs for training and hiring and results in workers with more than years of experience. Many unions also offering job training and apprenticeship programs.

In add-on, firms that are confronted with union demands for college wages may cull production methods that involve more physical capital and less labor, resulting in increased labor productivity. Tabular array iii provides an example. Assume that a firm can produce a home exercise cycle with iii dissimilar combinations of labor and manufacturing equipment. Say that labor is paid $xvi an hour (including benefits) and the machines for manufacturing cost $200 each. Under these circumstances, the total toll of producing a dwelling house exercise wheel will be lowest if the firm adopts the program of 50 hours of labor and 1 machine, as the table shows. Now, suppose that a union negotiates a wage of $20 an 60 minutes including benefits. In this case, information technology makes no difference to the firm whether information technology uses more hours of labor and fewer machines or less labor and more machines, though it might prefer to use more machines and to hire fewer union workers. (Afterwards all, machines never threaten to strike—merely they do non buy the final production or service either.) In the final column of the table, the wage has risen to $24 an hr. In this case, the firm clearly has an incentive for using the plan that involves paying for fewer hours of labor and using three machines. If management responds to union demands for college wages past investing more in machinery, then matrimony workers tin be more than productive considering they are working with more than or ameliorate physical capital equipment than the typical nonunion worker. However, the firm will need to hire fewer workers.

Hours of Labor	Number of Machines	Toll of Labor + Price of Auto $16/hour	Cost of Labor + Toll of Machine $20/hour	Price of Labor + Toll of Motorcar $24/hour
30	3	$480 + $600 = $1,080	$600 + $600 = $i,200	$720 + $600 = $1,320
40	ii	$640 + $400 = $one,040	$800 + $400 = $i,200	$960 + $400 = $1,360
50	1	$800 + $200 = $i,000	$1,000 + $200 = $1,200	$i,200 + $200 = $1,400
Table 3. Three Production Choices to Manufacture a Home Practice Cycle

In some cases, unions have discouraged the use of labor-saving physical capital letter equipment—out of the reasonable fear that new machinery volition reduce the number of spousal relationship jobs. For instance, in 2002, the union representing longshoremen who unload ships and the firms that operate aircraft companies and port facilities staged a work stoppage that shut downwardly the ports on the western coast of the United States. Ii fundamental bug in the dispute were the desire of the shipping companies and port operators to employ handheld scanners for record-keeping and computer-operated cabs for loading and unloading ships—changes which the wedlock opposed, along with overtime pay. President Obama threatened to use the Labor Management Relations Act of 1947—commonly known as the Taft-Hartley Human action—where a court tin can impose an eighty-day "cooling-off period" in guild to allow time for negotiations to proceed without the threat of a work stoppage. Federal mediators were called in, and the ii sides agreed to a deal in February 2015. The ultimate agreement immune the new technologies, but too kept wages, health, and alimony benefits high for workers. In the by, presidential utilise of the Taft-Hartley Act sometimes has fabricated labor negotiations more bitter and belligerent but, in this case, it seems to accept smoothed the road to an understanding.

In other instances, unions accept proved quite willing to adopt new technologies. In ane prominent example, during the 1950s and 1960s, the United Mineworkers union demanded that mining companies install labor-saving machinery in the mines. The mineworkers' union realized that over fourth dimension, the new machines would reduce the number of jobs in the mines, but the marriage leaders also knew that the mine owners would have to pay higher wages if the workers became more than productive, and mechanization was a necessary footstep toward greater productivity.

In fact, in some cases matrimony workers may be more willing to have new technology than nonunion workers, because the marriage workers believe that the wedlock will negotiate to protect their jobs and wages, whereas nonunion workers may be more concerned that the new technology will replace their jobs. In addition, union workers, who typically have higher job market feel and training, are likely to suffer less and benefit more than non-spousal relationship workers from the introduction of new technology. Overall, it is hard to make a definitive case that union workers as a group are always either more or less welcoming to new technology than are nonunion workers.

The Decline in U.S. Marriage Membership

The proportion of U.S. workers belonging to unions has declined dramatically since the early 1950s. Economists have offered a number of possible explanations:

• The shift from manufacturing to service industries
• The forcefulness of globalization and increased competition from foreign producers
• A reduced desire for unions because of the workplace protection laws now in place
• U.South. legal surroundings that makes it relatively more hard for unions to organize workers and expand their membership

Let's discuss each of these four explanations in more than detail.

A first possible caption for the pass up in the share of U.Due south. workers belonging to unions involves the patterns of job growth in the manufacturing and service sectors of the economy shown in Effigy 3. The U.S. economy had nigh 15 million manufacturing jobs in 1960. This total rose to 19 one thousand thousand by the late 1970s and then declined to 17 one thousand thousand in 2013. Meanwhile, the number of jobs in service industries and in government combined rose from 35 million in 1960 to over 118 million by 2013, co-ordinate to the Agency of Labor Statistics. Because over time unions were stronger in manufacturing than in service industries, the growth in jobs was non happening where the unions were. It is interesting to note that several of the biggest unions in the country are made upwardly of government workers, including the American Federation of Country, Canton and Municipal Employees (AFSCME); the Service Employees International Union; and the National Education Clan. The membership of each of these unions is listed in Table 2. Outside of authorities employees, however, unions accept not had great success in organizing the service sector.

Figure 3. The Growth of Service Jobs. Jobs in services have increased dramatically in the last few decades. Jobs in government accept increased modestly. Jobs in manufacturing have non changed much, although they take trended downwards in recent years. Source: U.S. Section of Labor, Bureau of Labor Statistics.

A second explanation for the decline in the share of unionized workers looks at import competition. Starting in the 1960s, U.Southward. carmakers and steelmakers faced increasing competition from Japanese and European manufacturers. As sales of imported cars and steel rose, the number of jobs in U.S. auto manufacturing fell. This industry is heavily unionized. Not surprisingly, membership in the United Auto Workers, which was 975,000 in 1985, had fallen to roughly 390,000 past 2015. Import contest not merely decreases the employment in sectors where unions were once strong, just likewise decreases the bargaining ability of unions in those sectors. However, as nosotros have seen, unions that organize public-sector workers, who are non threatened by import competition, accept continued to see growth.

A third possible reason for the decline in the number of union workers is that citizens frequently telephone call on their elected representatives to laissez passer laws concerning work conditions, overtime, parental get out, regulation of pensions, and other problems. Unions offered potent political back up for these laws aimed at protecting workers but, in an ironic twist, the passage of those laws then made many workers feel less need for unions.

These starting time three possible reasons for the decline of unions are all somewhat plausible, but they take a common trouble. Most other developed economies have experienced like economic and political trends, such as the shift from manufacturing to services, globalization, and increasing government social benefits and regulation of the workplace. Clearly there are cultural differences between countries as to their acceptance of unions in the workplace. The share of the population belonging to unions in other countries is very high compared with the share in the United states of america. Table four shows the proportion of workers in a number of the globe'due south high-income economies who belong to unions. The United States is near the lesser, along with France and Spain. The last column shows union coverage, defined as including those workers whose wages are adamant by a union negotiation even if the workers practice non officially belong to the union. In the U.s., union membership is about identical to union coverage. However, in many countries, the wages of many workers who practice not officially belong to a marriage are still adamant by collective bargaining between unions and firms.

Country	Union Density: Pct of Workers Belonging to a Wedlock	Wedlock Coverage: Pct of Workers Whose Wages Are Determined by Union Bargaining
Austria	37%	99%
France	9%	95%
Germany	26%	63%
Japan	22%	23%
Netherlands	25%	82%
Spain	11.3%	81%
Sweden	82%	92%
United Kingdom	29%	35%
United States	11.1%	12.five%
Table 4. International Comparisons of Union Membership and Coverage in 2012. (Source, CIA Earth Factbook, retrieved from www.cia.gov)

These international differences in marriage membership suggest a fourth reason for the pass up of union membership in the Us: possibly U.S. laws are less friendly to the formation of unions than such laws in other countries. The close connection between matrimony membership and a friendly legal environment is apparent in the history of U.S. unions. The great rising in matrimony membership in the 1930s followed the passage of the National Labor-Management Relations Act of 1935, which specified that workers had a right to organize unions and that management had to give them a fair chance to do then. The U.S. regime strongly encouraged the formation of unions during the early 1940s in the belief that unions would help to coordinate the all-out production efforts needed during World War 2. However, after World State of war II came the passage of the Taft-Hartley Human action of 1947, which gave states the ability to allow workers to opt out of the union in their workplace if they so desired. This law made the legal climate less encouraging to those seeking to class unions, and union membership levels before long started failing.

The procedures for forming a spousal relationship differ substantially from land to land. For instance, the procedures in the U.s.a. and those in Canada are strikingly different. When a group of workers wish to grade a union in the United States, they announce this fact and an election date is fix when the employees at a house will vote in a hugger-mugger election on whether to grade a marriage. Supporters of the union lobby for a "yes" vote, and the management of the house lobbies for a "no" vote—often even hiring exterior consultants for assistance in swaying workers to vote "no." In Canada, by contrast, a wedlock is formed when a sufficient proportion of workers (usually nigh 60%) sign an official carte saying that they want a union. At that place is no split up "ballot appointment." The management of Canadian firms is express by police in its ability to lobby against the union. In addition, though it is illegal to discriminate and burn workers based on their union activity in the United States, the penalties are slight, making this a not so plush mode of deterring wedlock activity. In short, forming unions is easier in Canada—and in many other countries—than in the United states.

In summary, marriage membership in the United States is lower than in many other high-income countries, a difference that may be due to different legal environments and cultural attitudes toward unions.

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Central Concepts and Summary

A labor matrimony is an organisation of workers that negotiates as a grouping with employers over compensation and work conditions. Union workers in the Usa are paid more on average than other workers with comparable education and experience. Thus, either union workers must exist more productive to lucifer this higher pay or the higher pay volition lead employers to find ways of hiring fewer union workers than they otherwise would. American union membership has been falling for decades. Some possible reasons include the shift of jobs to service industries; greater competition from globalization; the passage of worker-friendly legislation; and U.Due south. laws that are less favorable to organizing unions.

Self-Bank check Questions

1. Table 5 shows the quantity demanded and supplied in the labor market for driving city buses in the town of Unionville, where all the coach drivers belong to a union.
   

   Wage Per Hour	Quantity of Workers Demanded	Quantity of Workers Supplied
   $14	12,000	vi,000
   $16	ten,000	7,000
   $18	eight,000	8,000
   $xx	6,000	9,000
   $22	4,000	10,000
   $24	two,000	11,000
   Tabular array 5.

   1. What would the equilibrium wage and quantity be in this marketplace if no union existed?
   2. Assume that the union has plenty negotiating power to raise the wage to $iv per hr higher than it would otherwise be. Is there now excess demand or excess supply of labor?
2. Do unions typically oppose new engineering out of a fright that it will reduce the number of wedlock jobs? Why or why non?
3. Compared with the share of workers in most other high-income countries, is the share of U.Southward. workers whose wages are determined by union bargaining college or lower? Why or why not?
4. Are firms with a high percentage of union employees more likely to go bankrupt because of the higher wages that they pay? Why or why not?
5. Practice countries with a higher percentage of unionized workers normally have less growth in productivity because of strikes and other disruptions acquired by the unions? Why or why not?

Review Questions

1. What is a labor union?
2. Why do employers have a natural reward in bargaining with employees?
3. What are some of the most of import laws that protect employee rights?
4. How does the presence of a labor union alter negotiations betwixt employers and workers?
5. What is the long-term tendency in American union membership?
6. Would you expect the presence of labor unions to atomic number 82 to higher or lower pay for worker-members? Would you expect a higher or lower quantity of workers hired past those employers? Explicate briefly.
7. What are the main causes for the contempo trends in wedlock membership rates in the Usa? Why are union rates lower in the United States than in many other developed countries?

Disquisitional Thinking Questions

1. Are unions and technological improvements complementary? Why or why not?
2. Will union membership proceed to reject? Why or why not?

References

AFL-CIO. "Grooming and Apprenticeships." http://www.aflcio.org/Learn-Virtually-Unions/Training-and-Apprenticeships.

Fundamental Intelligence Agency. "The Globe Factbook." https://world wide web.cia.gov/library/publications/the-earth-factbook/index.html.

Clark, John Bates. Essentials of Economic Theory: As Applied to Modern Problems of Industry and Public Policy. New York: A. Grand. Kelley, 1907, 501.

United Auto Workers (UAW). "About: Who Nosotros Are." http://www.uaw.org/page/who-we-are.

The states Department of Labor: Agency of Labor Statistics. "Economic News Release: Spousal relationship Members Summary." Last modified Jan 23, 2013. http://www.bls.gov/news.release/union2.nr0.htm.

United States Department of Labor, Agency of Labor Statistics. 2015. "Economical News; Union Members Summary." Accessed April 13, 2015. http://world wide web.bls.gov/news.release/union2.nr0.htm.

Glossary

collective bargaining

negotiations betwixt unions and a business firm or firms

labor union

an system of workers that negotiates with employers over wages and working weather condition

Solutions

Answers to Cocky-Check Questions

1. 1. With no union, the equilibrium wage charge per unit would be $18 per hour and at that place would be viii,000 motorcoach drivers.
   2. If the union has enough negotiating ability to raise the wage to $4 per hour college than under the original equilibrium, the new wage would be $22 per hour. At this wage, four,000 workers would be demanded while ten,000 would exist supplied, leading to an excess supply of six,000 workers.
2. Unions accept sometimes opposed new technology out of a fear of losing jobs, but in other cases unions have helped to facilitate the introduction of new technology because unionized workers felt that the union was looking subsequently their interests or that their higher skills meant that their jobs were substantially protected. And the new technologies meant increased productivity.
3. In a few other countries (such as France and Spain), the percentage of workers belonging to a spousal relationship is similar to that in the United States. Union membership rates, however, are generally lower in the Us. When the share of workers whose wages are determined by union negotiations is considered, the United States ranks past far the lowest (because in countries like France and Kingdom of spain, marriage negotiations often determine pay even for nonunion employees).
4. No. While some unions may cause firms to go bankrupt, other unions help firms to become more than competitive. No overall pattern exists.
5. From a social point of view, the benefits of unions and the costs seem to counterbalance. There is no evidence that in countries with a higher percentage of unionized workers, the economies grow more than or less slowly.

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Source: https://opentextbc.ca/principlesofeconomics/chapter/15-1-unions/